CAGLE'S, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
JULY 21, 2003
TO THE HOLDERS OF CLASS A COMMON STOCK:
Notice is hereby given that the Annual Meeting of Shareholders of Cagle's,
Inc. (the "Company"), will be held at the Company's offices located at 2000
Hills Avenue, Atlanta, Georgia on the 21st day of July, 2003, at 11:00 A.M.
Eastern Daylight Time, for the following purposes:
(1) To fix the number of members of the Board of Directors at ten (10),
and to elect the members thereof; and
(2) To transact any other business that may properly come before the
meeting or any adjournments thereof; all as set forth in the Proxy
Statement accompanying this notice.
Only holders of record of Class A Common Stock on May 24, 2003 will be
entitled to vote at the meeting. The transfer books will not be closed.
By order of the Board of Directors.
George L. Pitts, Secretary
Atlanta, Georgia
June 20, 2003
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON, PLEASE
SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED BUSINESS
REPLY ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY, IF YOU WISH, WITHDRAW
YOUR PROXY AND VOTE IN PERSON.
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CAGLE'S, INC.
2000 HILLS AVENUE, N.W. ATLANTA, GEORGIA 30318
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JULY 21, 2003
The enclosed proxy is solicited by the Board of Directors of Cagle's, Inc.
(the "Company") for use at the Annual Meeting of Shareholders to be held on
July 21, 2003, and at any adjournment thereof, and is revocable by written
notice to the Secretary of the Company at any time before its exercise.
Unless revoked, proxies in the form enclosed, properly executed and received
by the Secretary of the Company prior to the Annual Meeting, will be voted
at the meeting as specified by the shareholder in the proxy, or, except
with respect to broker non-votes, if no specification is made in the proxy,
the persons designated as proxies shall vote FOR each of the proposals set
forth in the accompanying Notice of Annual Meeting of Shareholders, and
according to their discretion upon all other matters which may properly
come before the meeting. Broker non-votes will not be included in vote
totals and will have no effect on the outcome of the vote. Abstentions will
not be counted either as a vote FOR or a vote AGAINST a proposal and will
have no effect on the outcome of the vote.
An annual report to the shareholders, including financial statements for
the year ended March 29, 2003, is enclosed herewith. The approximate date of
mailing this proxy statement and the form of proxy is June 20, 2003. On May
24, 2003, the Company had outstanding and entitled to vote at the Annual
Meeting 4,742,998 shares of Class A Common Stock. With regard to any matter
to be considered, each share of Class A Common Stock is entitled to one
vote. If a quorum is present, directors will be elected by the affirmative
vote of a majority of the shares represented at the meeting in person or by
proxy. A quorum consists of shareholders owning 50% of the Class A Common
Stock plus one share. Only shareholders of record on May 24, 2003 are
entitled to vote at the meeting.
The enclosed proxy will be voted to fix the number of members of the Board
of Directors at ten (10) and elect the ten (10) nominees named in the proxy.
Each director shall hold office until the annual meeting of shareholders
held next after his or her election and until a qualified successor shall be
duly elected and qualified. In the event that any of the nominees is unable
to serve (which is not anticipated), the persons designated as proxies will
cast votes for the remaining nominees and for such other persons as they may
select. All ten (10) of the nominees are presently directors, whose terms of
office will expire at the Annual Meeting.
DIRECTORS AND EXECUTIVE OFFICERS
The following persons are presently directors of the Company and have been
nominated to stand for re-election:
J. Douglas Cagle, 72, has been a director of the Company since 1953, and
has been Chief Executive Officer of the Company since 1970 and Chairman of
the Board of the Company since July 1993. Mr. Cagle served as President of
the Company from 1970 to July 1993. He is expected to be reelected to the
offices of Chief Executive Officer and Chairman of the Board when his one
year term expires at the next annual meeting of the Board, which is
scheduled for July 21, 2003, immediately following the Annual Meeting of
Shareholders. Mr. Cagle is the father of George Douglas Cagle and James
David Cagle, who are also directors of the Company.
George Douglas Cagle, 50, has been a director of the Company since July
1976. Mr. Cagle has been Vice President-New Product Development since July
1993, an office to which he is expected to be reelected at the next
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annual meeting of the Board. Mr. Cagle is the son of J. Douglas Cagle and
the brother of James David Cagle, who are also directors of the Company.
Kenneth R. Barkley, 62, has been a director of the Company since July
1977. Mr. Barkley has been Treasurer and Chief Financial Officer of the
Company since July 1977 and Senior Vice President-Finance of the Company
since July 1993. He is expected to be reelected to the offices of
Treasurer, Chief Financial Officer and Senior Vice President-Finance at the
next annual meeting of the Board.
James David Cagle, 49, has been a director since July 1987. Mr. Cagle has
been Vice President-New Product Sales since July 1993, an office to which he
is expected to be reelected at the next annual meeting of the Board. Mr.
Cagle is the son of J. Douglas Cagle and the brother of George Douglas
Cagle, who are also directors of the Company.
Jerry Gattis, 54, has been a director since July 1989. Mr. Gattis has been
President and Chief Operating Officer of the Company since July 1993, offices
to which he is expected to be reelected at the next annual meeting of the
Board.
Mark M. Ham IV, 48, has been a director since July 1993. Mr. Ham has been
Assistant Secretary of the Company since July 1987 and Vice President-
Information Systems since July 1993, offices to which he is expected to be
reelected at the next annual meeting of the Board.
John J. Bruno, Jr., 59, has been a director since July 1993. Mr. Bruno has
been Senior Vice President-Sales and Marketing of the Company since July
1993, an office to which he is expected to be reelected at the next annual
meeting of the Board.
Candace Chapman, 47, has been a director since July 1993. Ms. Chapman is a
principal of C2 & Associates, Ltd., an investment marketing firm and served
in this capacity from March 1996 to June 1999 as well. Ms. Chapman was a
partner and the Director of Marketing and Client Services of New Amsterdam
Partners LLC, an investment management firm, from June 1999 to February 2001.
Prior to forming C2 & Associates, Ltd., Ms. Chapman had been a
Consultant/Director of Marketing at Wyatt Investment Consulting, Inc. since
October 1994. Ms. Chapman is a Certified Public Accountant and also holds
Series 7 and Series 63 investment licenses.
G. Bland Byrne III, 51, has been a director since July 1995. Mr. Byrne is
a principal in the law firm of Byrne & Davis, P.C. Mr. Byrne previously was
a partner in the law firm of Swift, Currie, McGhee & Hiers, from January 1984
to April 1994.
Panos J. Kanes, 50, has been a director since June 2001. Mr. Kanes is a
member of the law firm of Kanes and Benator, Attorneys At Law, LLC, and has
practiced law with the firm since 1977. He is also a member of the
accounting firm of Kanes, Benator & Company, LLC and has practiced as a
CPA since becoming licensed in 1979.
The foregoing list of nominees includes several persons who also may be
considered executive officers of the Company: namely, J. Douglas Cagle,
George Douglas Cagle, Kenneth R. Barkley, James David Cagle, Jerry Gattis,
Mark M. Ham IV, and John J. Bruno, Jr. In addition, the following
individuals are expected to be reelected as executive officers
immediately following the Annual Meeting:
George L. Pitts III, 54, has been Secretary of the Company since July 1993,
an office to which he is expected to be reelected at the next annual meeting
of the Board. Mr. Pitts has been employed in the corporate accounting
department of the Company since 1974, holding the position of Corporate
Accounting Manager.
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Alvin B. Harp, 59, has been Vice President-Live Operations since May 2002,
an office to which he is expected to be reelected at the next annual meeting
of the Board. Prior to commencing employment with the Company in May 2002,
Mr. Harp had been a live production manager for ConAgra Foods and its
predecessor, Seaboard Farms, since 1984.
OWNERSHIP OF VOTING SHARES BY OFFICERS, DIRECTORS AND OTHERS
The following table sets forth the stock ownership in the Company, as of
May 1, 2003, of each director and nominee for director and of each
executive officer named in the Summary Compensation Table on Page 7
hereof.
Amount and Nature of Percent of
Beneficial Ownership of Class A
Name Class A Common Stock Common Stock
--------------------- ----------------------- ------------
J. Douglas Cagle 2,082,355 1 43.9 %
George Douglas Cagle 456,714 2 9.6 %
Kenneth R. Barkley 3,018 *
James David Cagle 443,343 3 9.3 %
Jerry Gattis 792 *
Mark M. Ham IV 100 *
John J. Bruno, Jr. 549 *
Candace Chapman 2,000 *
G. Bland Byrne III 2,000 *
Panos J. Kanes 0 *
All directors, nominees and
executive officers
as a group (12) persons 2,990,871 63.1 %
________________
*Less than 1% of issued and outstanding shares of Class A Common Stock of
the Company.
1 This amount includes 100 shares held indirectly by Mr. Cagle through a
limited liability company (the "LLC") of which Mr. Cagle is an owner and
938,375 shares owned by Mr. Cagle as trustee of a trust established under
the will of his father. As a manager of the LLC, Mr. Cagle shares the power
to vote and dispose of the shares held by the LLC with his sons, George
Douglas Cagle and James David Cagle, the other managers of the LLC.
2 This amount includes the following shares held indirectly by Mr. Cagle: (a)
100 shares owned by the LLC, of which Mr. Cagle is an owner, and (b) 120,498
shares owned by the LLC as custodian for Mr. Cagle's children. As a manager of
the LLC, Mr. Cagle shares the power to vote and dispose of the shares held by
the LLC with his father, J. Douglas Cagle, and brother, James David Cagle, the
other managers of the LLC.
3 This amount includes the following shares held indirectly by Mr. Cagle: (a)
100 shares owned by the LLC, of which Mr. Cagle is an owner, and (b) 130,331
shares owned by the LLC as custodian for Mr. Cagle's children. As a manager of
the LLC, Mr. Cagle shares the power to vote and dispose of the shares held by
the LLC with his father, J. Douglas Cagle, and brother, George Douglas Cagle,
the other managers of the LLC.
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The following table sets forth each person known to management to be the
beneficial owner of more than five percent of the voting securities of the
Company as of May 1, 2003:
Amount and Nature
Name and Address of Title of of Beneficial Percent of
Beneficial Owner Class Ownership (1) Class
- ---------------------------- ----------- ------------------ -----------
J. Douglas Cagle Class A
2000 Hills Avenue, N.W. Common Stock 2,082,355 2 43.9 %
Atlanta, Georgia 30318
George Douglas Cagle Class A
2000 Hills Avenue, N.W. Common Stock 456,714 3 9.6 %
Atlanta, Georgia 30318
James David Cagle Class A
2000 Hills Avenue, N.W. Common Stock 443,343 4 9.3 %
Atlanta, Georgia 30318
FMR Corp. Class A
82 Devonshire Street Common Stock 474,700 5 10.0 %
Boston, Massachusetts 02109
________________
1 Of the shares shown in this column, management knows of no shares with
respect to which such listed beneficial owners have the right to acquire
beneficial ownership as specified in regulations of the Securities and
Exchange Commission.
2 This amount includes 100 shares held indirectly by Mr. Cagle through the LLC
and 938,375 shares owned by Mr. Cagle as trustee of a trust established under
the will of his father. As a manager of the LLC, Mr. Cagle shares the power
to vote and dispose of the shares held by the LLC with his sons, George Douglas
Cagle and James David Cagle, the other managers of the LLC.
3 This amount includes the following shares held indirectly by Mr. Cagle: (a)
100 shares owned by the LLC, and (b) 120,498 shares owned by the LLC as
custodian for Mr. Cagle's children. As a manager of the LLC, Mr. Cagle shares
the power to vote and dispose of the shares held by the LLC with his father,
J. Douglas Cagle, and brother, James David Cagle, the other managers of the
LLC.
4 This amount includes the following shares held indirectly by Mr. Cagle: (a)
100 shares owned by the LLC, and (b) 130,331 shares owned by the LLC as
custodian for Mr. Cagle's children. As a manager of the LLC, Mr. Cagle shares
the power to vote and dispose of the shares held by the LLC with his father, J.
Douglas Cagle, and brother, George Douglas Cagle, the other managers of the LLC.
5 FMR Corp. ("FMR") is the beneficial owner of 474,700 shares as of October
10, 2002, all of which are held by Fidelity Low Priced Stock Fund, a registered
investment company, of which Fidelity Management & Research Company, a wholly
owned subsidiary of FMR, serves as investment advisor.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and the
Securities and Exchange Commission ("SEC") regulations, the Company's
directors, certain officers, and greater than ten percent shareholders are
required to file reports of ownership and changes in ownership with the SEC
and the American Stock Exchange and to furnish the Company with copies of all
such reports they file. Based solely on its review of such reports from
certain reporting persons, the Company believes that all filing requirements
applicable to its directors, officers and ten percent shareholders were
satisfied during the Company's last fiscal year.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
AND COMPENSATION OF DIRECTORS
The Board of Directors established an Audit Committee in February 1981.
This committee reviews the work of the Company's independent public
accountants, management, and internal accounting staff to ensure that each
is properly discharging its responsibilities in the area of financial
control and reporting. The members of the Audit Committee are Candace
Chapman, Chairman, G. Bland Byrne III, and Panos J. Kanes. G. Bland Byrne III
is not considered independent under the rules of the American Stock Exchange
due to the amount of compensation for legal services that the Company paid
to the law firm of which he is a partner. (See MATERIAL INTERESTS AND
MATERIAL TRANSACTIONS.) In conformity with the applicable rule of the
American Stock Exchange, the Board has determined that it is in the best
interests of the Company and its shareholders for Mr. Byrne to remain on
the Audit Committee because of his extensive knowledge of the Company's
operations and because no other director satisfies the requirements of the
American Stock Exchange rule. The Board has adopted a charter for the Audit
Committee which is included as an Appendix "A" to this Proxy Statement.
The Company does not have nominating or compensation committees of the
Board of Directors. During the last fiscal year, there were five meetings of
the Board of Directors, and the Audit Committee met one time. During the last
fiscal year, each of the incumbent directors attended at least 75% of the
aggregate of the number of meetings of the Board of Directors and the number
of meetings of the Audit Committee held during any period during which he or
she was a director or member of the Audit Committee, respectively.
During the Company's last fiscal year, each director who was not also an
officer or full time employee of the Company received an annual director's
fee in the amount of $15,000. Directors who were officers and/or full time
employees of the Company received an annual director's fee of $10,000.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee reviewed with the Company's Chief Financial Officer and
independent auditors overall audit scopes and plans, the results of internal
and external audit examinations, evaluations by the auditors of the Company's
internal controls and the quality of the Company's financial reporting. The
Committee also discussed with the independent auditors other matters required
to be discussed by the auditors with the Committee under Statement on
Auditing Standards No. 61 (communication with audit committees). The
Committee received from the auditors their annual written report on their
independence from the Company and its management, which is made under
Independence Standards Board Standard No. 1 (independence discussions with
audit committees). The Committee also engaged in substantive discussions
with the auditors regarding their independence from the Company. In
performing all of these functions, the Audit Committee acts only in an
oversight capacity, and, in its oversight role, the Committee relies on the
work and assurances of the Company's management, which has the
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primary responsibility for financial statements and reports, and of the
independent auditors, who, in their report, express an opinion on the
conformity of the Company's annual financial statements to generally
accepted accounting principles. In reliance on these reviews and
discussions and on the report of the independent auditors, the Audit
Committee has recommended to the Board of Directors, and the Board has
approved, that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the year ended March 29, 2003,
for filing with the Securities and Exchange Commission.
The Board of Directors has a adopted a resolution requiring the Company's
Audit Committee to engage the independent auditor. For each fiscal year and
until such time different procedures are adopted, prior to the engagement of
the auditor, the Audit Committee will pre-approve the auditor and the services
to be provided by the auditor.
Candace Chapman, Chairman
G. Bland Byrne III
Panos J. Kanes
AUDIT FEES, AUDIT-RELATED FEES, TAX FEES, AND OTHER FEES
Fiscal 2003
Moore Stephens Frost, PLC served as the auditors for the Company for the
fiscal year ended March 29, 2003. The aggregate fees billed for audit and
quarterly reviews were $144,000. Audit-related fees billed were $36,000 and
other fees totaling $5,000 were billed for review of Company's employee
benefit plans. Moore Stephens Frost, PLC did not provide any tax services
to the Company during fiscal 2003.
Fiscal 2002
Moore Stephens Frost, PLC served as the auditors for the Company for the
fiscal year ended March 30, 2002. The aggregate fees billed for audit and
quarterly reviews were $139,891. Audit-related fees billed were $34,325 and
other fees totaling $5,000 were billed for review of Company's employee
benefit plans. Moore Stephens Frost, PLC did not provide any tax services
to the Company during fiscal 2002.
Arthur Andersen LLP also performed auditing services for the Company for
the fiscal year ended March 30, 2002, for which the Company was billed $125,550.
In addition, during fiscal 2002 Arthur Andersen provided tax planning services,
prepared tax returns of the Company and audited the Company's employee benefit
plans, for which additional services the Company was billed $146,130.
CHANGES IN ACCOUNTANTS
On April 5, 2002, Cagle's, Inc. dismissed Arthur Andersen LLP as its
auditor. The dismissal was approved by the Company's Audit Committee of the
Board of Directors. The report of Arthur Andersen LLP on the Company's
financial statements for the fiscal year ending March 30, 2002 did not
contain any adverse opinion or disclaimer of opinion, and was not qualified
or modified as to uncertainty, audit scope, or accounting principles, nor
were there any disagreements during fiscal 2002 or during the subsequent
interim period through the date of dismissal of the auditor on any matter of
accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which, if not resolved to the satisfaction of
Arthur Andersen LLP, would have caused it to make a reference to the subject
matter or the disagreement in connection with its report. No reportable
events have occurred during fiscal 2002 or during the subsequent interim
period through the date of dismissal of the auditor.
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Also on April 5, 2002, Cagle's, Inc. retained the accounting firm of Moore
Stephens Frost, PLC in Little Rock, Arkansas, to complete the audit for the
Company's fiscal 2002 and also for the most recently completed fiscal year
ending March 29, 2003. During the Company's last two fiscal years, and during
the period since the end of the most recent fiscal year, the Company has not
consulted Moore Stephens Frost with respect to the application of accounting
principles to any specific transaction, or with respect to the type of audit
opinion that might be rendered on the company's financial statements, or with
respect to any disagreement with prior accountants or any reportable event.
EXECUTIVE COMPENSATION
The following tables and narrative text discuss the compensation paid in the
Company's fiscal year ended March 29, 2003, and its two prior fiscal years, to
the Company's Chief Executive Officer and the Company's four (4) other most
highly compensated executive officers.
.. Summary Compensation Table
.. Long Term
.. Annual Compensation Compensation
- ----------------------- -------------------------- ------------ ---------------
.. Securities
Name and Principal Underlying All Other
Position Year(1) Salary(2) Bonus(3) Options Compensation(4)
J. Douglas Cagle 2003 $345,559 -0- -0- 14,3605
Chairman of the Board & 2002 340,311 -0- -0- 13,0625
Chief Executive Officer 2001 335,154 -0- -0- 29,8495
Jerry Gattis 2003 324,271 -0- -0- 10,966
President & 2002 319,259 -0- -0- 6,680
Chief Operating Officer 2001 319,439 -0- -0- 6,235
John L. Bruno 2003 217,320 -0- -0- 5,023
Senior Vice President - 2002 212,514 -0- -0- 3,518
Sales and Marketing 2001 212,497 -0- -0- 2,769
Alvin B. Harp 2003 6 162,859 -0- -0- 4,709
Senior Vice President
Kenneth R. Barkley 2003 154,111 -0- -0- 11,331
Senior Vice President- 2002 151,673 -0- -0- 8,254
Finance, Treasurer & 2001 151,801 -0- -0- 5,482
Chief Financial Officer
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1 The year designated in this column refers to the Company's fiscal year
which ended in such year, which for 2003 was March 29, 2003.
2 With regard to any named executive officer who is also a director of the
Company, the amounts shown in this column include the amount of the annual
director's fee paid to such person, as reported on Page 5 hereof.
3 The amounts in this column represent the bonuses paid to the named
individuals pursuant to the Company's Executive Bonus Plan.
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4 This column includes contributions or payments to, or for the account of,
the named individuals pursuant to the Company's Cash or Deferred Profit-
Sharing Plan (the "401(k) Plan") and the Company's medical reimbursement
plan. The medical reimbursement plan covers directors who are also
employees and officers. Medical expenses of the covered individuals and
their dependents which are not otherwise covered by insurance are paid under
this plan upon the filing of a proof of claim by the covered individual with
the Company's insurance carrier.
5 These amounts include, $22,942 for 2001,$8,452 for 2002, and $10,274.88
for 2003 representing the portion of the premiums paid with respect to the
split dollar life insurance policies described in COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION below, which portion is
considered income for purposes of taxation.
6 Alvin B. Harp did not work for the Company during fiscal 2002 or fiscal
2001.
Compensation Committee Interlocks and Insider Participation
The Board of Directors of the Company does not have a standing compensation
committee. The entire Board determines the compensation of the Chief
Executive Officer, and the Chief Executive Officer determines the
compensation of the remaining executive officers of the Company and its
wholly owned subsidiary. The following members of the Board of Directors
were also executive officers of the Company and its subsidiary during the
last fiscal year: J. Douglas Cagle, Jerry Gattis, Kenneth R. Barkley, John
J. Bruno, Jr., Mark M. Ham IV, George Douglas Cagle and James David Cagle.
Two irrevocable trusts hold cash value life insurance policies on the lives
of J. Douglas Cagle and his wife, the aggregate face value of which is
$20,000,000. The Company is a party to a split dollar agreement with each
trust pursuant to which the Company has agreed to make all premium payments
on the policies which are not paid by the trusts until the death of both J.
Douglas Cagle and his wife or, if earlier, the termination of the agreements
by the trusts, at which time the trusts shall repay to the Company all
amounts paid by the Company on such policies. There were no premiums paid
by the Company on these policies during the last fiscal year.
BOARD REPORT ON EXECUTIVE COMPENSATION
The components of the annual compensation paid to the Chief Executive
Officer and the other executive officers of the Company are (i) base salary;
(ii) a bonus calculated pursuant to the provisions of the Company's Executive
Bonus Plan; (iii) allocation of contributions made by the Company to the
respective accounts of such executive officers under the Company's 401(k)
Plan; and (iv) payments made pursuant to the Company's medical reimbursement
plan. The base salaries of the Chief Executive Officer and the other
executive officers are not directly related to factors such as the Company's
profitability, sales growth, return on equity or market share, except to the
extent that such factors impact the Company's overall ability to satisfy its
compensation obligations to all employees. The base salaries for the Chief
Executive Officer and the other executive officers of the Company are
determined primarily by a comparison of similarly situated officers of other
companies in the poultry industry. Years of service, degree of
responsibilities, company growth, future plans and the Company's current
ability to pay are also taken into account in determining such base salaries.
The Chief Executive Officer and certain other executive officers are
participants in the Company's Executive Bonus Plan. The amount of the bonuses
payable are based upon the Company's after tax return on shareholder equity
during its fiscal year. Such return is calculated before the accrual of any
bonus payable pursuant to the plan. Pursuant to the plan, each participant
receives a bonus in an amount equal to: fifty percent (50%) of such
participant's base
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salary for a return on shareholders equity of 20% or more,
thirty percent (30%) of base salary for a return of 15% to 19.99%, twenty
percent (20%) of base salary for a return of 10% to 14.99%, with no bonus
payable if the return is less than 10%.
This report was prepared by the entire Board of Directors of the Company.
PERFORMANCE GRAPH
The following graph presents a comparison of five year cumulative total
shareholder returns among Cagle's, Inc., the S&P 500 Index and a Peer Group
Index. This information provides the annual return from the beginning of the
previous fiscal year assuming dividends are reinvested monthly. The graph
assumes an initial investment of $100 in March 1998. The Peer Group Index
consists of the following companies: Pilgrim's Pride Corporation, Sanderson
Farms, Inc., and Tyson Foods, Inc.
March 31, 1998 = $100.00
Base Year March March March March March
Company/Index 1998 1999 2000 2001 2002 2003
CAGLE'S, INC. 100 132.05 74.76 94.91 83.55 50.84
S&P 500 INDEX 100 118.46 139.72 109.43 109.69 82.53
PEER GROUP INDEX 100 108.00 57.13 72.37 81.36 51.47
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MATERIAL INTERESTS AND MATERIAL TRANSACTIONS
Certain directors or nominees for director are affiliated with entities
that have transacted a material amount of business with the Company during
the Company's last fiscal year or that propose to do so during the Company's
current fiscal year. These business relationships are as follows:
The firm of Byrne & Davis, P.C. in which G. Bland Byrne III, a director of
the Company, is a principal, received $772,275 during the last fiscal year of
the Company as fees for legal services rendered to the Company and its
subsidiaries.
The Board of Directors of the Company does not have a standing compensation
committee. The entire Board determines the compensation of the Chief Executive
Officer, and the Chief Executive Officer determines the compensation of the
remaining executive officers of the Company and its wholly owned subsidiary.
The following members of the Board of Directors were also executive officers of
the Company and its subsidiary during the last fiscal year: J. Douglas Cagle,
Jerry Gattis, Kenneth R. Barkley, John J. Bruno, Jr., Mark M. Ham IV, George
Douglas Cagle and James David Cagle.
Two irrevocable trusts hold cash value life insurance policies on the lives of
J. Douglas Cagle and his wife, the aggregate face value of which is
$20,000,000. The Company is a party to a split dollar agreement with each
trust pursuant to which the Company has agreed to make all premium payments
on the policies which are not paid by the trusts until the death of both J.
Douglas Cagle and his wife or, if earlier, the termination of the agreements by
the trusts, at which time the trusts shall repay to the Company all amounts
paid by the Company on such policies. There were no premiums paid by the
Company on these policies during the last fiscal year.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation of shareholders of record by mail, telephone or personal contact,
arrangements will be made with brokerage houses to furnish proxy materials to
their principals, and the Company will reimburse them for mailing expenses.
Custodians and fiduciaries will be supplied with proxy materials to forward to
beneficial owners of stock.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of The Board of Directors has selected and pre-approved
Moore Stephens Frost, PLC to serve as independent accountants of the Company
for the current fiscal year. Representatives from Moore Stephens Frost, PLC are
expected to be present at the annual shareholders' meeting, will have an
opportunity to make a statement if they desire to do so, and will be available
to respond to appropriate questions.
PROPOSALS OF SECURITY HOLDERS FOR 2004 ANNUAL MEETING
The deadline for receipt of shareholder proposals for inclusion in the
Company's proxy statement and form of proxy for presentation at the 2004 annual
meeting of shareholders is February 11, 2004.
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OTHER MATTERS
Management does not know of any matter to be brought before the meeting other
than those referred to above. If any other matters properly come before the
meeting, the persons designated as proxies will vote thereon in
accordance with their best judgment.
Whether or not you expect to be present at the meeting in person, please sign,
date and return the enclosed proxy promptly in the enclosed business reply
envelope. No postage is necessary if mailed in the United States.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
HEREBY SOLICITED, ON WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL
STATEMENTS AND THE SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 13a-1 UNDER THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE COMPANY'S MOST RECENT FISCAL
YEAR. REQUESTS SHOULD BE ADDRESSED TO MR. GEORGE L. PITTS, SECRETARY,
CAGLE'S, INC., POST OFFICE BOX 4664, ATLANTA, GEORGIA 30302. IF THE PERSON
REQUESTING THE REPORT WAS NOT A SHAREHOLDER OF RECORD ON
MAY 24, 2003, THEREQUEST MUST INCLUDE A REPRESENTATION THAT SUCH
PERSON WAS A BENEFICIAL OWNER OF THE COMMON STOCK ON THAT DATE.
By order of the Board of Directors.
George L. Pitts, Secretary
Atlanta, Georgia
June 20, 2003
APPENDIX "A"
CAGLE'S, INC.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
PURPOSE
The Audit Committee (the "Committee") is appointed by the Board of
Directors (the "Board") to assist the Board in fulfilling its oversight
responsibilities. The Committee's primary purpose is to monitor the integrity
of the Company's financial reporting process, including the Company's systems
of internal accounting and financial controls, and the annual independent audit
of the Company's financial statements. The Committee will monitor the
independence and the performance of the Company's independent auditors.
AUTHORITY
In discharging its oversight role, the Committee is empowered to investigate
any matter brought to its attention with full access to all books, records,
facilities and personnel of the Company. The Committee is authorized to retain
outside counsel, auditors or other experts and professionals for this purpose.
The outside auditor is ultimately accountable to the Board and the Committee,
as representatives of the shareholders. The Board and the Committee have the
ultimate authority and responsibility to select, evaluate and, where
appropriate, replace the outside auditor (or to nominate the outside auditor to
be proposed for shareholder approval in any proxy statement.)
MEMBERSHIP
The Committee shall be comprised of not less than three members of the Board,
and the Committee's composition shall meet all requirements of the Audit
committee policy of the American Stock Exchange.
RESPONSIBILITIES
The Committee's job is one of oversight. In discharging its oversight
responsibilities, the Committee is not providing any expertise or special
assurance as to the Company's financial statements or any professional
certification as to the outside auditor's work.
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. This list shall not be
construed as being an all encompassing listing of the Committee's duties.
These functions are set forth as a guide with the understanding that the
Committee may diverge from this guide as appropriate under the circumstances:
1. The Committee shall review with management and the outside Company's
auditors the audited financial statements to be included in the Company's
Annual Report on Form 10-K (or the Annual Reports to Shareholders if
distributed prior to the filing of Form 10-K) and review and consider with the
outside auditors the matters required to be discussed by Statement of
Auditing Standards ("SAS") No. 61. The management review shall include
consultation with the Company's counsel relative to legal matters that could
have a significant impact on the Company's financial statement;
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2. The outside auditors shall be instructed to contact the Committee chair
whenever they feel the need to discuss specific issues relating to the
Company's quarterly financial report. As a whole, or through the Committee
chair, the Committee shall review with the outside auditors the Company's
interim financial results to be included in the Company's Quarterly Reports
on Form 10-Q to be filed with the Commission and the matters required to be
discussed by SAS No. 61, whenever the outside auditors contact the
Committee chair. Such review shall occur prior to the filing of the Company's
Quarterly Reports on Form 10-Q;
3. The Committee shall discuss with Management and the outside auditors the
quality and adequacy of the Company's internal controls;
4. The Committee shall request from the outside auditors annually, a formal
written statement delineating all relationships between the auditor and the
Company consistent with Independence Standards Board Standard No.1;
5. The Committee shall discuss with the outside auditors any such disclosed
relationships and their impact on the outside auditor's independence; and
6. The Committee shall recommend that the Board take appropriate action in
response to the outside auditor's report to satisfy itself of the auditor's
independence.
The Committee shall review the adequacy of this Charter on an annual basis.
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